The second annual college savings survey by AEGON
Institutional Markets, an investment adviser for the
college plans, showed that a scant 16% of parents know
about the 529 vehicles while a microscopic 4% of the sample
actually use one.

Parents may not be flocking to 529 plans, but they are
apparently socking money away for their children’s higher
education expenses.

According to the survey, 61%, are either saving for
college or have saved in the past, with 38% of respondents
saving on a regular basis. Yet, the majority of parents
surveyed, 75%, admit that they don’t know enough to make
good investment decisions.

Two-thirds or 67% of those who save for college say they
begin to save before their children are five years old.
Some 31% begin to save when their children are less than a
year old. Almost 20% of American parents are starting to
save when their children are five to nine years old.

The most popular college savings method cited was a bank
savings account, used by 61% of parents, up 7% from
2001.

Other savings vehicles include:

mutual funds, used by 44%

US savings bonds, 37%

stocks, 30%

money market accounts, 25%

certificates of deposit, 23%, and

education IRAs 21%

Big Bucks

Parents now believe they must save $80,400 on average to
feel adequately prepared to pay for one child’s college
tuition, an increase of nearly $35,000 from what they
believed they had to save a year ago.

Not surprisingly, the poll conducted by Harris
Interactive for AEGON found that parents are risk-averse
when saving for their children’s college expenses – with
nearly nine in ten believing that some investments are just
too risky for their children’s college funds.

Seven out of ten parents described themselves as
“conservative” investors when saving for their children’s
college expenses, an increase of 9% from 2001.

The study was conducted by telephone between March 22
and March 29, 2002, and included 500 interviews with
parents of children under 18.